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Press Release
7 Aug 2018
WTT HK and HKBN Announce Proposed Merger
  • Merger would enable higher quality network and fuller suite of products and services to customers
  • Increased scale and business expansion provide growth opportunities for employees
  • Combines the strengths and capabilities of both WTT and HKBN to create the best-in-class company in the Hong Kong telecom industry

Hong Kong — Aug 7, 2018 — WTT HK (“WTT” or the “Company”), Hong Kong’s leading ICT service provider today announced that MBK Partners, North Asia’s largest independent buyout firm, and TPG, a leading global alternative asset firm have entered into an agreement (“merger agreement”) with HKBN Ltd (“HKBN”; SEHK stock code: 1310) on a merger of WTT and HKBN. The transaction values WTT group at HK$10.5 billion and through the merger agreement, HKBN will issue MBK and TPG a combination of HKBN shares and Vendor Loan Notes. MBK Partners and TPG currently jointly own 100% of WTT.

HKBN is the second largest provider of residential broadband services in Hong Kong and offers an array of enterprise solutions for small and medium enterprises that are highly complementary to WTT’s pure-play enterprise solutions business that focuses on larger corporate and wholesale clients. WTT would also be able to utilise HKBN’s diversified business to increase the scale of its business and provide a comprehensive one-stop shop suite of services and enterprise solutions for customers.

Upon closing the transaction, MBK Partners and TPG will each own a 11.66% stake in HKBN. In addition, each of MBK Partners and TPG will hold a Vendor Loan Note valued at HK$970.5mm. The Vendor Loan Note is a non-voting, nil-coupon instrument, convertible into HKBN shares under certain conditions. As part of the transaction, HKBN will assume the existing debt and cash of WTT group. MBK Partners and TPG shall each nominate a Director for appointment to the Board of HKBN at closing, subject to approval of the HKBN shareholders. HKBN’s management and Board will also be further enhanced by WTT talents. 

Teck Chien Kong, Partner of MBK Partners said, “This is a transaction between two strong and highly complementary businesses that are committed to serving the needs of their customers to the highest of standards. Not only will the proposed merger benefit the resulting combined customer base through a broader and more convenient range of services, it will future proof the business amid an increasingly competitive and rapidly evolving ICT marketplace.”

Ricky Lau, Partner of TPG said, “First of all, we would like to thank Vincent Ma for building a very successful business over the past decades. WTT and HKBN make for a powerful combination that is strategically compelling for both companies. Combining the two businesses will allow us to achieve even more for our customers, employees and business partners through a comprehensive suite of solutions.”

The transaction remains subject to the approval of HKBN shareholders and regulatory approval, and is expected to close in the first quarter of 2019. Goldman Sachs is acting as the financial advisor and Clifford Chance is acting as legal advisor to MBK Partners and TPG for the transaction.

About WTT HK 

Formerly known as Wharf T&T Limited and acquired by MBK Partners and TPG Capital in 2016, WTT is the only enterprise-focused fixed telecommunication services operator with significant fixed line infrastructure in Hong Kong. WTT has already invested over HK$7 billion in its network to create a leading fiber-optic end-to-end network in Hong Kong covering more than 5,400 commercial buildings. Together with a robust in-house service engine offering a comprehensive range of ICT products and bespoke services, WTT is a trusted partner of its diverse base of over 56,000 business customers serving their mission critical needs. For more information about WTT, please visit www.wtthk.com.

About MBK Partners 

Founded in March 2005, MBK Partners is one of the largest private equity funds in Asia with capital under management of over US$15 billion.  MBK Partners focuses on North Asia and has developed expertise in various industries, including consumer and retail, telecommunications and media, financial services, healthcare, logistics and industrials.  MBK Partners has completed transactions of over US$21 billion in aggregate value over the past twelve years. Further information about MBK Partners may be found at http://www.mbkpartnerslp.com.

About TPG 

TPG is a leading global alternative asset firm founded in 1992 with more than $84 billion of assets under management and offices in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, Seoul, and Singapore. TPG’s investment platforms are across a wide range of asset classes, including private equity, growth venture, real estate, credit, and public equity. TPG aims to build dynamic products and options for its investors while also instituting discipline and operational excellence across its investment strategies and the performance of its portfolio. For more information, visit www.tpg.com.